Exploring the Different Types of Credit Cards in the Philippines
Published on: April 6, 2020 . Last updated: April 7, 2020 Category:
Choosing a credit card is a lot like shopping for items like clothes and shoes. You don’t just pick one—you take your time in choosing from a wide variety of options. You factor in each item’s prices, design, quality, and other personal preferences.
Likewise, there are different types of credit cards out there, each with their own perks and drawbacks. Sure, it can get overwhelming at first. But you’ll get the hang of it once you familiarize yourself with the options.
Are you looking for the best credit card and exploring your choices? Then you’re in the right place. We will help you find the right card for you by examining all the types of credit cards in the Philippines.
But first, let’s go over some important things to consider when choosing a credit card. These factors will help you narrow down your choices and prevent you from incurring hidden charges.
Important Factors to Consider When Choosing a Credit Card
- Annual Fee. The membership fee you pay for the convenience of using a credit card. Many starter credit cards have waived annual fees for the first year, so you can save money as a new credit cardholder.
- Interest Rate. Also known as the finance charge, this is the interest that your issuing bank will charge you on the next billing cycle when you fail to pay your credit balance. Try to find a credit card with a low interest rate.
- Penalty Fees. Banks charge a lot of penalty fees, so it’s best to be responsible when using a credit card. The most prominent charges include late payment fees, cash advance fees, and over-the-limit charges.
- Rewards Program. Find a credit card that can give you rewards every time you swipe it. Most cards can get you some perks including cash back rebates, annual fee waivers, gift certificates, and air miles.
- Eligibility Requirements. As exciting as it is, you can’t just get a credit card when you apply for one. Credit card providers will approve or deny your application based on your eligibility and the documents you provided.
Types of Credit Cards in the Philippines
Banks in the Philippines offer many types of credit cards that cater to every type of spender. Whether you’re a first-timer or a multiple cardholder, you can always find the best one by comparing all the options.
Standard Credit Card vs. Premium Credit Card
Standard credit cards are as standard as they come. You’re more likely to get a standard credit card as your first card since they are the most common. It’s ideal for beginners and low-income earners, thanks to its lower credit limit and lower annual fees.
A standard credit card also comes with a basic rewards program coupled with a high interest of up to 3%. It’s basic and it gets the job done. If you want a no-fuss credit card, choose the standard one.
Premium credit cards, on the other hand, have more bells and whistles than standard credit cards. A premium credit card comes with added perks and exclusive privileges. It can get you access to concerts, events, or private lounges at airports.
It also has a higher credit limit and lower interest rates to encourage more spending. That’s why it also has a higher annual fee, perfect for high-income earners and big spenders.
Secured Credit Card vs. Unsecured Credit Card
Most banks in the Philippines offer unsecured credit cards that require extensive background checks and specific documents. To apply for one, you need to prove that you have a steady source of income.
The issuing bank will then assess your credit limit based on your occupation, income, credit history, etc. The higher your income is, the higher your credit limit will be, providing you with enough spending power to afford high-ticket purchases.
Meanwhile, secured credit cards are easier to get since it doesn’t involve a background check and a ton of documents. The catch? The issuing bank will require you to have a deposit account as collateral.
If you have any unpaid balance on your secured credit card, the bank will deduct the amount from your account. Since it’s reliant on your deposit, you will receive a lower credit limit. This is why banks often offer this type of credit card.
Types of Credit Cards According to Benefits
- Rewards Credit Cards allow you to earn reward points every time you use your credit card. You can then use these points to redeem perks like gift certificates, freebies, and discounts on shopping items, flights, or hotel stays.
- Cashback Credit Cards guarantee you rebates on goods and services for each purchase. The best rebate credit cards in the Philippines allow you to redeem 0.2% to 6% of your monthly purchases.
- Balance Transfer Credit Cards allow you to transfer your balance from your previous credit card to a new, low-interest credit card. This is ideal for those looking to try out the perks of other issuing banks.
- Shopping Credit Cards are ideal for frequent shoppers. These cards give you access to tons of discounts and freebies at popular retail stores nationwide.
- Frequent Flyer Credit Cards allow you to earn travel points every time you buy tickets from a certain airline. You can redeem these points in exchange for airline miles or ticket discounts.
- Airline Miles Credit Cards are almost the same as frequent flyer credit cards. The only difference is that these cards will allow you to earn and redeem travel points from any airline.
- Business Credit Cards help business owners and employees manage expenses such as travel and procurement. Benefits may include expense reports, travel insurance, and low introductory rates.
- Fuel Credit Cards mostly benefit car owners looking to save money on fuel. Aside from the usual perks, a fuel credit card earns you points and rebates every time you fuel up your car.
- Low-Income Credit Cards are perfect for low-income earners looking to stretch their spending power at low costs. These cards come with lower credit limits to avoid the urge to overspend. With this card, applicants should typically earn at least PHP 120,000 annually.
- Co-Branded Credit Cards are designed by brands to give more incentives to their loyal customers. Sometimes, they are also limited edition credit cards for special occasions.
Credit Card Payment Networks
Credit cards can also be grouped into two payment networks: Visa and Mastercard. These two are the most popular networks that handle the payments between banks and merchants.
There are other minor players (American Express, JCB, UnionPay, Diners Club, to name a few) in the Philippines but only Visa and Mastercard have the worldwide reputation only few can match.
Card payment networks decide where a credit card can be accepted. For example, if Visa and Mastercard are the only accepted cards in a certain store, you cannot pay using a JCB card.
These networks also provide unique perks for cardholders, including travel assistance, emergency services, and other exclusive offers. Credit card networks offer different features and benefits for every type of consumer. Compare them to find out which one suits your needs.
Find the Right Credit Card for You with Moneymax!
Now that we’ve covered the different types of credit cards, the next logical step is to compare your options. Remember that choosing the wrong credit card may put you in debt rather than save you money.
That’s why it’s important to understand the differences between credit cards and what features they offer. This way, you can confidently pick the perfect card that will suit your needs. Here are some suggested credit card features for beginners, travelers, and shoppers.
Best Credit Card Features for Beginners
- Zero or low annual fees. Most banks offer waived annual fees for the first year.
- Low interest rates. Credit cards with a low interest charge can help you save money. They may provide limited or fewer rewards, but interest rates of just 1% to 2.75% make up for it.
- Low minimum annual income requirement. This is ideal for credit card first-timers such as employees who are fresh out of college and do not earn much.
Best Credit Card Features for Travelers
- Free travel insurance coverage. Ideally, the coverage should go as high as PHP 20 million and should cover other members of your family.
- Exclusive lounge access to airports worldwide. Add comfort to your frequent travels by taking well-deserved rests on world-class airport lounges.
- Air miles rewards program. Your credit card should easily earn you points for airline tickets, hotel accommodations, or travel vouchers.
Best Credit Card Features for Rewards
- Non-expiring rewards points. Make sure all your accumulated points will not go to waste, especially if you’re someone who stacks points for bigger rewards.
- Variety of rewards. Choose a credit card that can give you diverse rewards such as cash back rebates, shopping and dining gift certificates, annual fee waivers, or even charitable donations.
- High cashback rates, especially in the category you spend the most on (groceries, gas, dining, shopping, utility bills, etc).
But how exactly will you explore and compare all these credit cards? Don’t worry, Moneymax can make it easier for you. Take advantage of our free comparison platform to compare credit cards across different banks in the Philippines.
Moneymax will assist you until you score the perfect credit card for you. And the best part? Our services are free! Start comparing below so you can start living a financially independent lifestyle.